TaxTMI 
TaxTMI 
2025 (6) TMI 1762
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut appreciating the facts of the case and hence, the order passed is void and bad-in-law and deserves to be quashed. 2. In law and in the facts and circumstances of the Appellant's case, the Id. CIT(Appeals) has grossly erred by confirming the Id. Assessing Officer decision that the loss amounting to Rs. 72,67,098/- is fictitious and non-genuine without bringing any cogent and concrete evidence on records and in complete disregard of the order of Hon'ble ITAT for A.Y. 2011-12 wherein similar issue have been adjudicated in favor of the Appellant. Therefore, the addition confirmed without brining any specific finding on record is without application of mind therefore, the addition confirmed needs to be deleted." 3. The brief facts of the case are that the assessee is a private limited company and engaged in the business of manufacturing and sale of edible and non-edible oil products/by-products. The assessee for the year under consideration filed its return of income on 29.09.2010 declaring total income of Rs. 15,31,24,189/-. Thereafter, the Assessment Order was framed under section 143(3) of the Act for the year under consideration at the total income of Rs. 15,4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tal Sales = B 1397 8392 587355764 Difference (losses in transaction) = A-B (-)72,67,098 6.1 As per the facts taken from the record of the Ld. CIT(A), the Assessing Officer has held that such transactions are paper transactions without actual delivery of goods and is not at market rates. It was found that assessee company has claimed to have purchased goods from Indian Bullion Market Association Limited and on very same date, such goods are sold to Tirupati Proteins Limited and just entering such paper transactions, assessee has incurred losses which has been claimed to have been set off against other business income. The Assessing Officer has discussed the background relating to misuse of platform in assessment order and disallowed such loss under Section 43(5) read with Section 73 of the Act. 6.2 During the course of appellate proceedings, assessee has stated that trading transactions at NSEL was carried out to avail short term financing for the business requirement and losses incurred represent interest cost. The assessee has explained that as it was in need for finance, and finance was available through NSEL by entering into purchase transactions back....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a pair of contracts for every deal and conceptually NSEL was set up as an online trading platform for a number of commodities and each commodity as its delivery locations at NSEL designated warehouse or accredited godowns. But as per information the said platform was misused. Client of M/s. N. K. Proteins Pvt. Ltd. submitted that M/s. N. K. Industries Ltd. executed T+3 contract in the electronic platform of NSEL whereby N. K. Industries Ltd. sold 100 kg. of castor seeds to another prospective investor/client of another broker of NSEL for Rs. 100/-. The another prospective investor client of NSEL in turn executes T+36 trade contract on the electronic platform of NSEL whereby it sells the castor seeds to another client of M/s. N. K. Proteins Ltd. such as M/s. N. K. Corporation which is an associate concern for Rs. 110/-. Thereafter, the associate concern i.e. M/s. N. K. Corporation carry out intragroup sale back to M/s. N. K. Proteins Ltd. to square off the sale/purchase transactions and to maintain the stock position. All these three transactions were executed simultaneously and after the above set off of circular transactions, M/s. N. K. Proteins Ltd. has to receive the amount on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a part of business loss. As rightly contended on behalf of the assessee-company, the exercise of re-characterization of transactions in the light of statement given by Shri Nilesh Patel should be restricted to only determination of correct taxable income. The relevant purchase and sales transactions were entered into by the assessee-company in order to avail the funds and, therefore, the loss incurred in the said transactions actually represented cost of such funds which was a business loss. The adverse inference drawn by the learned CIT(A) against the assessee on the basis of withdrawal of such loss partly was also not correct as the reasons for such withdrawal proposed by the assessee were duly explained and the fact that the assessee-company by entering into these transactions had availed finance for the purpose of business was duly established. As regards the applicability of TDS provision, the learned Counsel for the assessee has pointed out from the relevant details of transactions that the sale proceeds were received by the assessee-company from different entities while payment towards the purchase was made towards different entities. The cost of finance thus was not paid t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....latform. Further, the said payments have been made through Settlement Account and thus it is clear that such transaction does not amount to Barter. It was explained before the Assessing Officer that the assessee has purchased the same through NSEL on delivery basis and these transactions are not paper transactions under traders' contract. To substantiate the same, the assessee had furnished the details of Purchases along with the Purchase invoices and other relevant details to the special auditor at the time of special audit and the sample copies of obligation report so as to justify the payment to NSEL towards the regular (delivery based) purchases under Farmers contract were submitted before the Assessing Officer. The Assessing Officer having examined the details held that explanation of the assessee is not acceptable as the alleged payments have been made through settlement account of NSEL and the same is settled against other parties' account. The Assessing Officer relied on the Special auditor Report which has also given the finding that castor seeds of Rs. 23.02 crore are received to the assessee company as NSEL payments in barter system, which is income/receipt of the compan....